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Play to Earn: NFT Gaming and Its Rise in the Philippines

2021-09-09

Games recently created on the blockchain now give rise to a new kind of gameplay that they call ‘Play to Earn,’ and is increasingly becoming popular in the Philippines. In this type of games, players get rewards based on the time they invested in playing these games. ‘Play to Earn’ games allow players to become owners of their in-game items or characters and do anything with it. They can use it, sell it, or earn from it, which is better than most of the games in the market where you can purchase some in-game digital items but cannot sell anywhere else without getting into specific terms of service violations. There have been emerging play-to-earn games recently but one must still be cautious and remember to DYOR to avoid scam games. Free to Play and Centralized Games

Prior to the expansion into the ‘Play-to-Earn’ concept, it is vital for the readers to understand the existing trend in the video game industry. According to Asia’s managing director, Ronnie Tan, the game industry that was previously dominated by consoles and arcades got disrupted because of smartphones, leading to the rise of the model ‘Free-to-Play.’

In a Free-to-Play or F2P model, anyone can begin to play a game without initially investing. You just need to download a game, and you can start playing. These games always have a model of monetization. Those that are most successful monetize the time of the player. In F2P games, players have a choice between:

  1. Paying to instantly get rewards.

  2. Playing and grinding to get a bonus and spending time to win a prize

Oftentimes, it is free to start playing these games. Whenever the player gives payment, they can have access to powerful characters, items, or shortcuts that can help them win in the game. As an example, for Candy Crush, whenever you run out of moves, you can give payment to buy additional moves that you can use for a certain level. Whenever it is difficult for you to get through a level, you may end up paying continuously. However, recently, ‘Free-to-Play’ games became successful in selling stuff on customization like items or “skins” that can make the character of the player look better. Oftentimes, these skins may not affect the gameplay or power up your character. All it does is make you appear better than other players. Aside from that, having this can even give you bragging rights as it demonstrates that you have the cash to make you appear better than anyone else.

A considerable segment of the revenue of the video game industry comes from ‘Free to Play,’ as it amounts to $88 billion. That is what’s happening even if only 38% of the people who play on mobile, pay for the in-game items.

Just like with any game right now that includes ‘Free-to-Play’ games, in reality, no matter how much money you spend on upgrading your character or time you spend to play the game, the game company is still the one who owns all your characters and items. Even if there may be informal marketplaces where you can sell your Animal Crossing T-shirt designs or Mobile Legends account like RMT or ‘Real Money Trading, these activities are often not allowed by the Terms of Service of the game company.

What is ‘Play-to Earn’?

The ‘Play-to-Earn’ concept has Axie Infinity as its poster child. In the video game industry, the model ‘Play-to-Earn’ represents a new model in the business, where the game lets the players become owners of their in-game assets and allows them to do anything they want with them. Game designers and developers also get rewards as players continue to play the game. Some play-to-earn games let you earn real money with just low investment. 

According to Ronnie Tan, the future of games is in the Play-to-Earn model. That is because it allows owners to become true owners of their in-game assets. Because of the tokenization of digital items, people can sell and buy items without being concerned about getting scammed or devalued. Why are people not afraid of getting scammed or devalued? That is because games in Play-to-Earn often make use of the blockchain, so it can host in-game assets as NFTs or non-fungible tokens. This applies to so many games like the League of Legends’ virtual lands, Axie Infinity’s Axies, or Lost Relics’ weapons and items. For the sake of brevity, whenever the item in the game is an NFT, every item would have a unique attribute that can verify that it is authentic and is proven on the blockchain. Because of that, people can immediately know that the digital item could be a duplicate, which is why no two Axies can ever be the same.

When it comes to long-term sustainability, blockchain games must have great game economics with various participants to become successful. For Axie Infinity, it needs to have various participants in an economy that is driven by the community, so the ecosystem will continue.

NFT Gaming and Its Rise in the Philippines

Because of the rise of the play-to-earn phenomenon, so many gaming associations, guilds, and NFTs have cropped up all over the world, so people will become educated to join in.

Included here is the YGG or Yield Guild Games that Beryl C. Li, Gabriel “Gabby” Dizon, and another individual with the pseudonym Owl of Moistness founded. This guild is investing in NFTs of games and is working on organizing player communities that earn money from playing. By June, they have reported having 1 thousand scholars all over the world playing the game inspired by Pokémon: Axie Infinity. They have earned an excess of 14 million tokens in-game called SLPs or Small Love Potions that are priced at around $1.9 million. The $4 million Series A investment of YGG was completed last June, and it will allow the network to expand through lending out and buying additional NFT assets. The investment has been led by the venture capital firm BITKRAFT ventures, which is focused on e-sports, interactive media, and gaming. One of their founding partners, Jens Hilgers, has lauded the efforts of YGG as a catalyst in the transition towards economies that players own.

Other than making an investment in Axie Infinity, YGG also became partners with the trading card game based on blockchain called Splinterlands, and wherein guild members were granted early access in priority. This game is among the many who have great potential in the model play-to-earn.

According to Dizon, at its core, YGG has a community composed of gamers who want to play-to-earn. Consider it as a guild of MMO or massively multiplayer online that operates across various games, invests in NFTs that generate yield in those games, and lends in-game inventory and assets out to their base of players.

For Axie Infinity, players can earn the SLP cryptocurrency by winning in-game battles. Players can have the SLP converted to cash or ETH. Those who breed need these SLPs so they can breed more Axies. Both new players and old would purchase these newly birthed Axies. Some Axies have a prize over the other as they have certain traits like having special parts, being great in battle, or an Axie that is among the earliest to exist. Because of that, collectors also prize Axies. Since it is a blockchain game, it may not be possible for two Axies to be the same. Right now, only one Galadriel exists, and it is among the most valuable Axies available. Dizon has proclaimed that virtual worlds and games have increasingly turned into hosts of real economic activity as they have accelerated and enabled at a scale because of blockchain technology.

What is NFT Gaming?

For gaming, the movement of “play-to-earn” has continuously emerged. Here, players of NFT games collect the game’s rewards that they can eventually convert into real cash. Even if this type of cryptocurrency was available for several years, it was able to reach significant heights because of the COVID-19 pandemic. The continuous lockdowns have rendered millions jobless, making them open to earn money through gaming.

Since the rate of unemployment has continued to fluctuate in the Philippines, the NFT game known as Axie Infinity became massively popular. Sky Mavis, the game’s Vietnamese developer, has reported that almost half of the game’s 70 thousand downloads last April came from the Philippines. According to one of the Filipino gamers, Arthur Lapina, he was not initially convinced that the game could allow you to earn through playing. However, he tried it and bought three Axies for around $4 to $5. He used these to battle other players and earned SLPs that he could swap into cryptocurrencies like Ethereum and convert into Philippine Pesos. 

An Understanding of the NFT Gaming Movement

As digital properties, NFTs can take various forms, from animated GIFs to memes and in-game assets. With the use of the blockchain, the NFT’s ownership record gets stored in a digital ledger and allows players (not the game developers) to own their collectibles in the game. Because of that, they can move NFT items in games based on blockchain off the platform and then traded or sold in any open market that players often do, so they can have their SLP converted into cash.

In April 2020, Lapina tried to play Axie Infinity for the first time and cashed out P1,000 after playing for fifteen days. However, since the value of the SLPs increased by July, he earned around P14,000 and more. Nonetheless, because of the popularity of Axie Infinity, it is now more costly and harder to start out in the game. In the past year, a team of three Axies only cost $5. Nowadays, it is steeply-priced at $1,000. Because of that, they are now mainly focused on providing scholarships wherein they offer the game to any possible Axie team player so they can eventually earn for themselves. This was expressed by John Emmanuel “Pot” Dela Peña in a documentary. He is among the three entrepreneurs who were able to come up with the program AxU or Axie University to handle the cost issues.

In the scholarship system, it involves managers who have their Axies rented out to those who are incapable of investing upfront cash. In order for the “scholars” to earn income, they need to train and use NFTs, so they can win tokens. The earnings will get split between the community manager, NFT owner, and scholar.

Howard Garancho is a scholar who took the game really seriously. He graduated from college but, because of the pandemic, he is unable to search for work. After seeing the Play-to-Earn documentary, he set up his computer and put sticky notes all over the wall that contained reminders related to the game. He treated it as work because for him to earn, he needs to be committed to the game and play hard every day.

Can People Earn Money from Play-to-Earn Games?

Yes. There are lots of ways people can earn money from the ‘Play-to-Earn Model. Axie Infinity is an example of this. With Axie Infinity, you can earn money by doing the following:

  1. Those who breed can acquire SLP, so they can breed new Axies that they can sell in the marketplace.

  2. People expect that these lands can also generate yields in the future. 

  3. In the upcoming “Land Gameplay” of Axie Infinity, players can buy virtual lands that they can sell to another buyer.

  4. Whenever you win battles, you get SLP as a reward that you can convert into cash. Those who place high in the Season Rankings can also receive more tokens like the AXS, which is the game’s governance token.

Aside from the game’s money-generating mechanics, there are thousands of people who create content outside the game and earn from it. Content writers, artists, and YouTubers also earn by creating informative content on Axie Infinity.

Can ‘Play-to-Earn’ also be ‘Free-to-Play’?

Not every blockchain game that you can ‘Play-to-Earn’ can also be ‘Free-to-Play.’ For Axie Infinity, you need at least three Axies before you can start playing. Unless you can find someone who can give you these 3 Axies, you need to purchase them from the marketplace. ‘Free-to-Play’ blockchain games could have certain limitations that will encourage players to buy, so they can play the game properly. 

Eventually, in the future, the developer of Axie Infinity, Sky Mavis, is planning to introduce a feature that will enable the players to begin playing for free so that players will have a feel for the game without having to buy anything from the start. The great news about ‘Play-to-Earn’ games is that the in-game assets that you buy can get resold, unlike a significant percentage of the current ‘Free-to-Play’ games, wherein you won’t be able to sell the items that you want or dislike. In Axie Infinity, you can sell every Axie that you don’t like or if you need to have it liquidated for cash. According to the Yield Guild Games co-founder, Beryl Chavez Li, the beauty of the ‘Play-to-Earn’ model is that it allows players to get in and out of the program anytime.

Since a lot of the ‘Play-to-Earn’ games got built on the blockchain Ethereum, players can easily get in and out of the game just by having their in-game assets sold for the ETH cryptocurrency. They can eventually have their ETH used to purchase characters, weapons, and items on a different blockchain game. There may even be cases when the items of a blockchain game become interoperable with a different blockchain game.

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